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Economic impact from Japan disaster reaches Texas

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Posted: Sunday, March 27, 2011 12:00 pm

By Colleen Flaherty

Killeen Daily Herald

More than two weeks after the devastating events in Japan, local and national business experts say that goods supply chains remain relatively uninterrupted. The long-term consequences of the disaster for Central Texas are still unknown, however, but may not be entirely negative.

"We live in a global economy, and the effect of a disruption of the magnitude of the Japanese earthquake and tsunami will impact all areas, including Central Texas," said economist Ray Perryman, head of the Waco-based economic and financial consulting firm Perryman Group.

According to information from Perryman, Japan was Texas' 10th-largest trading partner last year, representing almost $4 billion in exports. Texas' biggest exports were chemicals, computers and electronics, machinery and equipment, while Texas imported many Japanese goods. Japan has also been a major investor in Texas since at least 2005.

But, Perryman said, supply chain delays and other negative effects on Central Texas will be small.

Texas A&M University-Central Texas global business professor and retired Coca-Cola Company executive David Geigle agreed.

In today's economy, corporations have "hedged their risks" of upsetting the global supply chain, using a multiple sourcing model.

When events such as those in Japan occur, he said, parallel production in other parts of the world can pick up the slack. It's possible that corporations could come to view Japan as a less stable source, however, he said.

On Saturday, the global concerns about radiation and general control at Japan's Fukushima Dai-ichi nuclear power plant were still high.

Texas could step in to fill a production security void, Austin-based Texas Automobile Dealers Association president Bill Wolters said.

While the events in Japan had little impact on U.S. inventories, and most of the approximately 20 percent of Japan-based production that affects the U.S. car market is set to resume by the beginning of April, "Japan may start losing some of that electronics and parts business, and some more of that may come to the U.S.," he said. "That may help U.S. car manufacturing if, all of a sudden, Japan's not quite a reliable source of parts."

Given its economy, resources and relationship with Japan, Wolters said, "a lot of that could accrue to the benefit of Texas."

"Texas is kind of in a unique position to accommodate some of the worldwide shortages of staples," and car parts and electronics production, he said.

Texas A&M University AgriLife Extension Service economist Mark Welch said that Japan is self-sustaining in terms of its rice supply, but buys a lot of other American and Texas agricultural products.

Increased buying as it attempts to rebuild its economy will either directly or indirectly benefit Texas farmers as prices increase, he said.

Although Texas technology companies are clustered around Austin and parts south, local availability of smartphones and tablets that have Japan-sourced parts, especially batteries, could be affected by the disaster.

Best Buy in Killeen was out of the recently launched iPad2 Friday, but corporate communications personnel referred inquiries to Apple and the Consumer Electronics Association.

Calls to Apple were not returned, and Washington, D.C.-based association spokesperson Jason Oxman said he couldn't comment on specific products. The electronics industry is globally sourced, he said, but Japan accounts for about 15 percent of consumer electronics production.

Contact Colleen Flaherty at colleenf@kdhnews.com or (254) 501-7559. Follow her on Twitter at KDHfeatures.

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